Tuesday, May 12, 2009

HOW TO DEAL WITH LOAN RECOVERY AGENT'S HARASSMENT

We have had number of instances where bank's and financial institution's customers were abused, badly treated and at times physically harmed as well at the hands of debt recovery agents . Nuisance of recovery agents, is a genuine concern, facing each and every borrower today. While it is obviously not correct on the part of the customer to not honour his commitment of repaying the loan , it is also to be noted that most of the loans are of long term and it is very common for people to go through bad phases financially once in a while. During such period, borrowers deserve to be treated fairly by the banks. But ,that most of the times,does not happen. So much so that , the menace of recovery agents has driven few to take the extreme step of taking one's own life, just to avoid the mental and physical disgrace meted out to them by these agents.So, the question to be asked is , is this justified? Can recovery agents do all this ? And as a borrower cant we do something about it? Well the answer to this is that obviously none of this is justifiable and in fact in most of the cases even banks don't want this to happen to their customers.It is the recovery agents , who do it . These recovery agents
are mostly from an outsourced agency ,not banks employees hence the bank has limited control over them. However this does not absolve the banks from their responsibility. And as a customer there are lot of things that you can do to ensure that none of this ever happens to you.
In order to deal with recovery agents better, you must know and understand the broad guidelines RBI has issued in this regard. These are the guidelines which every bank/financial institution must follow.
1. Banks are supposed to carry out due diligence before recruiting agents. They have to do detailed background check on the agents, which includes police verification as well, to ensure that they don't end up recruiting anti social elements as their recovery agents.
2. The banks are supposed to inform the customer the details of the agent before handing over the customers details to the agent. In case this is not possible, the agent is supposed to carry the letter from bank mentioning all his details when he meets the cutomer.
3.Banks are required to record all the calls made to the customer by the agent and vice versa.
4. Banks are required to ensure that the agents don't resort to any form of abuse either physical or verbal, with the customer.
5.Recovery agents are not supposed to make visits at the customers place at late hours in the night.
6. Banks must resolve all the complaints received against the agents within stipulated time frame.
Now , you have a fair idea of the broad jurisdiction in which a recovery agent is supposed to carry out his duties on the bahalf of the bank. Ideally, no one should ever be harassed or hurt by an agent because the RBI guidelines say so. But, we don't live in an ideal world and hence we need to be prepared for the worst. So what can you do ? Try this.
1.Avoid taking loans from private banks - As far as possible , you should avoid taking loans from private banks. This is because , In India at least, most of the public sector banks have a better record when it comes to dealing with delinquent customers as compared to the private banks. The fact that public sector banks are owned and controlled by banks means that they stick to the guidelines laid down by RBI much more than private banks. Private banks , in their quest of maximising profits, put unnecessary pressure on recovery agents to recover money anyhow , which leads them to resort to arm twisting tactics. In fact,if you notice, all the major incidents of harassment at the hands of recovery agents have happened to the customers of private banks like ICICI, Citibank etc. So my first advice would be to stay clear of private banks while taking any loan. As they say ,prevention is better than cure.
2.Inform the bank - In most of the cases, the recovery agents resort to arm twisting tactics without the bank's
mandate to do so. They do it on their own . So if you get into such a situation ever, first thing to do is to inform
the local bank branch about this incident. Make a formal complaint with the bank manager Have a copy of the
complaint letter acknowledged by the bank officials. This will ensure that the banks put pressure on the agency
handling your case not to harass you in future. These days RBI is very strict on banks failing to protect
customers right against recovery agents and as such banks will take your complaint seriously.
3.Record the abusive calls- Sometimes the agents call the customer and abuse them. On phones they are more abusive because they know that you cant reach them (since they call from call centre location of which they wont tell) and also of the times they call using fake names. While banks are supposed to record all the calls made to the customer, you cant always be sure of that. Hence it makes sense to record the abusive calls from the agents. You can use this as an evidence against them.
4. Lodge a Complaint to the Police - Since harassing a person is an offence, you can also take police's help in dealing with the agents. If they continue to harass you , lodge a complaint with the police.The agents are generally very wary of the police and hence this works almost at all times.
5.Move Banking Ombudsman - You can also approach the banking ombudsman with your complaint. But before you approach them ,make sure that you have approached the bank with your complaint and given them sufficient time to resolve it.
6.Go legal - You can also file a legal case against the recovery agent/agency as well. You can make the relevant
bank a party to it as well.
7.Approach Media - As a last resort,you can approach the media. Most of the banks do not want any negative
publicity and as such would like to do everything possible to avoid that. Use the power of media , if all other
channels fail you.
But, these measures are meant to cure the symptoms only, not the disease. Hence , the most effective and long lasting cure to this menace is to pay off the debt. Remember, banks have lent you money when you needed it and hence now you must pay it back. In case of financial stress, you may approach the bank officials and they will be more than happy to help you by restructuring your loan terms etc.

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